Trademarks - ‘First in market’ relevant over ‘first to register’

Oct 26, 2015

26 October, 2015

The Supreme Court of India has upheld the interim injunction granted by the trial court on the basis of ‘first in the market’ test in a dispute where the defendant had filed for registration of the mark six years prior to the commencement of user by the Plaintiff, but had refrained from using the mark. The Court on 5-10-2015 in this regard noted that though the Defendant-respondent (Neon Laboratories Ltd. v. Medical Technologies Ltd.) had applied for the mark before, the user thereof had remained dormant for twelve years and that in the interregnum the Plaintiff-Respondents had not only applied for registration but had also commenced production and marketing of the similar drug and had claimed to have built up a substantial goodwill in the market. It was also observed the factors, balance of convenience and an irreparable loss, were both in favour of the Plaintiff-Respondents.

The Court was of the view that Section 34 of the Trade Marks Act, 1999, which is to protect the prior user from the proprietor who is not exercising the user of its mark, was prima facie in favour of the Plaintiff-Respondent. It observed that the Act does not permit hoarding of or appropriation without utilization of a trademark and that legislative intent behind Section 47 was to ordain that a trademark applicant does not have a permanent right by virtue of its application alone.

While upholding the prima facie view, the Supreme Court observed that the Court before whom the suit is pending has to look into the question as to whether the situation on the date of application for registration alone would be relevant, or whether the developments in the period between this date and the date of grant of registration would have any bearing on the rights of the parties.